Polyphemos the cyclops would have eaten Odysseus, if his survival was dependent on the moral virtues of Silenus’s satyrs. Fortunately for Odysseus, and Silenus and his lot, Odysseus could depend on his fellow citizens. If Polyphemos had the majority of America’s elected representatives depending on him for their survival in his cave, the way that they are presently beholden to lobbyists’ money for their electoral survival, he could have had a ready supply of citizens for his daily meals.

Cyclopean virtues regularly triumph over the virtues of democratic citizenship in the political landscape of the United States. Given that the Declaration of Independence embodies the spirit and principles that ground the virtues of democratic citizenship, why is it that cyclopes, who eat humans, win the day in America? Answering this question requires that we journey back to Attic Greece and her proto-democratic foundations.

Euripides: “The Cyclops” and its Relation to Civic Virtue

The notion of cyclopean virtues comes to us through satyr plays, which are a type of comedic morality play, which were performed with the tragedies and comedies of the Greek dramatic festivals. The play that I shall draw upon is Euripides “Cyclops.” It is worth noting that it is the only surviving satyr play and much of what we know about them, we know from this play.

Satyr plays have three main types of characters, which are satyrs, the citizens of the polis, and monsters, such as cyclopes. Each of these groups personifies, by their acts and deeds, a different weighting of human virtues, which results in significantly different world views.

Satyrs

Satyrs, like Pan, are goat-man hybrids. They worship Dionysos and they love wine. They are social beings, but they are subject to the excesses of their instincts. As a consequence, they lack the self-control/moral foundation that is needed to make the self-sacrifices that are required to create and maintain more than rudimentary degrees of social cooperation. In some instances, they appear by their foibles to be no more than lovable scalliwags. This is somewhat misleading because their actions, besotted or not, often put others in serious jeopardy. Satyrs stand as metaphors for humans who have not yet fully escaped the bonds of nature.

Citizens of the Polis

The citizens of the polis represent civilized humanity: they prefer to live together despite its disadvantages. To be civilized, in this sense, means that citizens control their instincts through reason by adopting a code that more or less embodies The Golden Rule. Effectively, the citizens of the polis recognize that by sharing a system of responsibilities to each other, they gain the benefits of social specialization, which tend to be significant improvements in the quality and productivity of the society in its respective enterprises. For contrast sake, a society without a division of labor is a society of jacks of all trades who are particularly unskilled because there are no trades to be jacks of.

One outcome of being a citizen of the polis is the development of an appreciation for the polis because of the good it brings. Remembering that these ideas are the product of small city states should help to foster the idea that a feeling of shared kinship to one’s community is commonplace among almost all societies, regardless of size, even when the community does not appear to be deserving of that appreciation. It is also common for members of communities to be willing to sacrifice themselves for the community or its values, even when upholding the values mean sacrificing the community.

Cyclopes

The cyclopes are relatively lawless, violent, powerful, solitary giants, who tend to limit their mutual interaction to shared defense. They appear to acknowledge each others territorial boundaries. They readily seize what they want from all other creatures, be it their possessions, their freedom, or their lives. They worship riches and they sacrifice to their appetites.

Cyclops: To Odysseus
Ey, little man! Wise men believe in one god and one god only: Wealth! Everything else is just words; fat words, lovely words but that’s all. All these shrines and temples of my father, built on every shore in Greece mean nothing to me. What’s the point of telling me all about them?

As for Earth, whether she wants to or not, she’ll still bring up the grass which will feed all my animals which I, in turn, will feed to the most important divinity in the world, my own belly. No sacrifices, nothing for anyone else, just my own lovely guts! Yum, yum!

Living in a quasi-asocial state, their very loose knit community lacks the benefits of shared enterprises. It was not always this way. Their ancestors were legendary tradespeople. The cyclopes lost these skills as they devolved into an athemistic society.

The cyclopes stand for humans who see citizenship, social interrelations, and laws as impediments to their liberty by nature and where they do acquiesce to such impartments, they do with the idea that it is a necessary evil. Accordingly, their political focus is upon limiting the scope of citizenship, social interrelations, and laws, especially with respect to any of these that compromise their lust for riches. Cyclopes do not have a sense of working together for mutual advancement, beyond that of mutual protection. Those who exist outside their community are prey, such as Silenus and his satyrs and Odysseus and his compatriots.

It is likely, though I am unaware as to whether or not it has been hypothesized, that the Greeks knew full well that the loss, or coverage, of an eye causes one’s perspective to lack depth. In Greek, and kin societies, to be described as a cyclops was an insult of some force. Antigonus, one of the Macedonian Diadochi who succeeded Alexander, slew a man for calling him a cyclopes.

Other Monsters

How does one speak to a void, such as our lack of knowledge about the other types of monsters that inhabited satyr plays? I am too unversed in this area of study to hypothesize about which imbalances of character other creatures would likely represent.

Cyclops: The Tale

“Cyclops” itself involves Odysseus taking a small party ashore the Isle of the Cyclopes in an attempt to get some provisions. He encounters Silenus and his satyrs, who have been captured by Polyphemos, who has made them into his slaves. The satyrs are miserable and “dry,” because there is no wine on the island because wine is a fruit of a socially organized society.

Silenus is introduced to Odysseus’s “bottomless” wineskin, which is literally a godsend to a satyr. Silenus, emboldened and stupefied by his increasing drunkenness, offers Odysseus more and more some of Polyphemos’s goods, which brings them to his cave, and their subsequent capture by Polyphemos.

In the short time of capture, Silenus lies and betrays Odysseus to get out of trouble and Polyphemos eats 6 of Odysseus’s men. Odysseus hatches a plan. He uses the wineskin to get Polyphemos debilitatingly drunk, which is not difficult because he is not used to drink, which is a social product. Once he’s passed out, Odysseus and his soldiers use Polyphemos’ sharpened staff as a spear and blind him. Importantly, the satyrs do not involve themselves in this enterprise, even though their freedom is at stake, due to cowardice and a lack of the notion of shared sacrifice.

The moral of the story is that a group of people who work together and use their reason can overcome a malevolent, overpowering force. What does this moral, story, and its characters have to do with politics in the USA?

The Vision of the Declaration of Independence: Citizens of the Polis

Earlier, I noted that the Declaration of Independence embodies the spirit and principles that ground the virtues of democratic citizenship. It is a statement of a code of conduct to regulate exchanges in the moral marketplace of the state.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

In, “The Dignity of No”, I demonstrated that the principle of Creator endowed, unalienable Rights is a statement of the duty that each citizen owes to each other to balance their claims of rights standing with how those claims impact the rights standing of others. In other words, the Declaration of Independence demands that YOU care as much for the rights of others as you do for your own.

Anthropophagy: The Love of Money is the Route of all Meals

Fundamentally, the cyclopean vision is founded on a will to power with an avaristic bent. Equal others are looked to for mutual security, so their property rights are recognized, but everyone else is a potential source of riches or food. Their interests are only relevant to the extent they enable the interests of the cyclopes.

John Adams was aware of the cyclopean vision in America, though he did not name it as such, and the potential problems it could cause the republic. He stated:

“Public Virtue cannot exist without private, and public Virtue is the only Foundation of Republics.” Adams insisted, “There must be a positive Passion for the public good, the public Interest, Honour, Power, and Glory, established in the Minds of the People, or there can be no Republican Government, nor any real Liberty. And this public Passion must be Superior to all private Passions. Men must be ready, they must pride themselves, and be happy to sacrifice their private Pleasures, Passions, and Interests, nay their private Friendships and dearest connections, when they Stand in Competition with the Rights of society.”

Adams worried that a businessman might have financial interests that conflicted with republican duty; indeed, he was especially suspicious of banks. He decided that history taught that “the Spirit of Commerce . . . is incompatible with that purity of Heart, and Greatness of soul which is necessary for a happy Republic.” But so much of that spirit of commerce had infected America. In New England, Adams noted, “even the Farmers and Tradesmen are addicted to Commerce.” As a result, there was “a great Danger that a Republican Government would be very factious and turbulent there.”

It is worth noting that Adams identifies the problem as an “addiction” to commerce. Much the same as the root of all evil is the love of money, not money itself, it is the addiction to commerce that is the problem, not commerce. When one is beholden of either of these, their duties to the others that make it possible for them to pursue their life, liberty, and the pursuit of happiness, disappear from the field of their vision.

The Rise of the Cyclopean Vision in the US

The institutions of the land were intended to be places where budding monarchs were nipped. Why is it that the institutions that were intended to practise republican banzai are engaged in greenhousing oligarchs, plutocrats, their minions, and their progeny? How did it come to happen that the citizens of the polis are being prepared as meals for the cyclopes by the satyrs?

Cyclopeans undermined the values of the Declaration of Independence by playing upon the ironies of liberty and regulatory malfeasence. The first play involved denuding Liberty of its societal context. The second play involved acting upon a justified fear that cyclopean interests could gain influence over the government and steal liberty.

The Irony of Liberty

The irony of liberty is that, in practical terms, one has to sacrifice liberty to gain liberty. The irony of liberty is not a contradiction, however. It merely is a statement about how within a limited marketplace of liberty exchange, cooperative action can create positive synergies wherein one gets more liberty back than one invests. One need only think about the liberty to pursue one’s happiness that is gained by accepting a set of laws that uphold personal and property rights as compared to the liberties one enjoys when no such laws whatsoever are not employed, as an example of the value of the liberty exchange.

Denuding liberty from its social context involved getting people to “forget” that the freedom to pursue life, liberty, and happiness is something no individual can guarantee or is guaranteed by virtue of being an individual. It is something that can only be realized by the sacrifices of others (of their liberty) to make it so.

To undermine the social context of liberty, the cyclopeans had to undermine the system of government that was created to defend and develop the citizen’s independence from the cyclopean vision. Cyclopeans needed to get the citizens to distrust their means of guaranteeing their independence. To do this they played upon the Irony of Regulatory Malfeasance.

The Irony of Regulatory Malfeasance

The irony of regulatory malfeasance is that the very mechanism that is used to prevent malfeasance is prone to being manipulated to promote malfeasance. The irony of regulatory malfeasance is not a contradiction. The irony plays out when people mistake the cause of the malfeasance to be regulations themselves, and not the people who manipulate the system.

This is an easy mistake to make, both, because it contains a kernel of logic and because humans, as a practical matter, are prone to manipulation. The logic has a number of trails, some of which are follows:

Regulations are prone to manipulation.

The more regulations that exist, the greater the likelihood that regulations will be manipulated.

Economies of scale are emergent.

The more regulations that are manipulated, the greater the likelihood of synergies of manipulation.

If the regulations don’t exist, then they can’t be manipulated.

If one wants to avoid regulatory malfeasance, avoid regulating.

Cyclopeans have been very successful in cultivating a deep distrust in government and regulations. This is not difficult in a land where so many of the populace have migrated from countries where cyclopeans use government as a means of repression, rather than emancipation. It is fascinating to observe how people who espouse limited government have set themselves up as the default option, when the government makes mistakes, even if that mistake is a failure to regulate.

Those who share the cyclopean perspective on limited governance, which does not mean they ascribe to its’ other aspects nor its reasons, incorrectly identify problems caused by a lack of governance to be problems caused by too much governance.

The problem with this view of government, as noted above, is that regulations are at the heart of the pursuit of life, liberty, and happiness. Regulations make rights happen. Accordingly, it is right to be concerned about the negative effects of too much governance, but one must also be aware that too little governance also undermines a society. Finding the right ratio between freedom and constraint is key to good regulation “Ratio” is the root of rationality, so the notion of finding the right ratio is a good place to conclude.

The cyclopean perspective lacks depth, which is why it lacks balance, which is why it was perceived by the Greeks to be less than fully rational. Those aspects of the current economic problems that are tied to the imbalance of influence between citizens, corporate interests, and elected representatives are the product of a well-entrenched cyclopean culture preying upon a reasonable apprehension citizens hold about government overreach. By not effectively regulating the relationship between corporate interests and elected representatives, corporate interests have overreached into the lives of the citizens. It is not rational to maintain this structure, if the aim of the society is to promote the values of the Declaration of Independence. This being so, citizens must end the practise where cyclopean corporate interests provide wineskins to the satyric elected representatives as trade bait to allow the cyclopeans to pillage the nation in the name of Polyphemos’ god, “Wealth”, and the filling of their bellies.

Gay-Lussac

The pressure of a fixed mass and fixed volume of a gas is directly proportional to the gas’s temperature.

This relationship is known as the Gay-Lussac’s Law and a pressure cooker is an example of the law in practice. Cooking under pressure creates the possibility of cooking with high temperature liquids because the boiling point of a liquid increases as its pressure increases. High pressure and high heat can result in delectable dishes.

Cooking under pressure can be also dangerous because as liquids change phase into gases their volume expands greatly. For example, at atmospheric pressure the volume of steam is about 1700 times greater than the volume of water. To prevent pressure cookers from becoming bombs, relief devices (pop safety valves) are employed that are capable of relieving all of the steam the vessel is capable of producing.

America the Beautiful Pressure Cooker

The political pressure cooker is beginning to heat up. The power brokers and institutions that drive the nation have arrived unannounced on the doorsteps of America like a gaggle of unwanted, high maintenance relatives that demand hospitality for an unforeseeable time and that won’t take no for answer. Furthermore, they’ve announced that more relatives are on the way. Whatever plans America’s householders had, they’ve just gone out the window, with their household budgie and the relatives’ cat in hot pursuit.

People are justifiably angry with this incursion. Their budgie might not have been much, but it was “their budgie”, nurtured from birth into what it had become. Justifiably angry householders are trying to work out why the relatives arrived on their doorsteps and why they brought their fucking cat.

Common Sense

Common sense, in everyday use, is thought of as something that everyone ought to know. Will Rogers notes the problem with this view.

I dont know why they call it common sense. If it was so common more people would have it. (h/t Tom in Paine)

Rogers knew, like most of us, that common sense notions have to be learned and, often, taught. For example, that most flames burn we can learn by experiencing being burnt. We learn morals by having our families and communities teach us, by calibration, how we ought to act.

Sometimes we encounter others that do not share our moral view. How ought we to treat those who do not share our common sense?

The sensus communis

Acknowledging that there are different ways of seeing a thing, broadly conceived, is a first step in allowing that some of those other ways of seeing might have legitimacy. This acknowledgment is embodied in the Roman notion of the sensus communis (there is more than one notion). In the Roman notion, common sense is seen as the sense of the commons, which means that the sensus communis encorporates every view on every thing that each member of the community holds. It is like the opposite of how we use common sense because our use means there is only one right way to view a thing. Their view is like a warehouse or a purse, where everyview is stored because it might become useful some day.

This Roman notion is conservative in bold letters. It is practical because it recognizes that the vast majority of us can see something the same way and be wrong. If everyone held only one view, then what options would we have if we find we’ve got it wrong? (Nature abhors monocultures, for the most part.) By conserving alternate views we have a ready set of options to try, if our accepted wisdom turns out to be unwise.

The sensus communis and the pressure cooker

How does this relate to the pressure cooker? Somehow the power brokers and institutions that drive the nation, through their understanding and manipulation of the relatives/variables in the formulae by which they mathematically model the world, got some things wrong. They sent these relatives to the nation’s doorsteps. The relatives are eating the householders out of the hold they have on the house. The householders want the power brokers and institutions to do their jobs and send the relatives on their way.

Unfortunately, that’s easier said than done because it’s difficult to sort out all of the causes of the problems and the likely solutions. It’s made worse by those who are trying to cover the tracks of the relatives on their way to the households. It’s made even worse by those who are trying to say that it’s the neighbors who are the problem, not the relatives.

All in all, there is a nation full of justifiably angry householders using their received wisdom to make sense of the information they are given, contrary interpretations abound, and the temperature and pressure are building as the opposing views run into each other at ever increasing pace while the larders getting smaller, and so on. What can be done to turn down the heat before the pop safety valve is tested and/or fails?

Pop Safety Quiz

Ralph B might say something like we ought to be ready to do more listening and less talking at. He’s right. Myiq might say we ought not to suffer fools lightly. He’s right. SoD might say we ought to stop mooning idiots. She’s right. Dakinikat, in her role as the Cajun Quincy of finance, will do the economic forensic work and reveal the culprits, and then say we ought to challenge our assumptions about what’s right. She’s right. Riverdaughter might say it’s time to unwind and tend to soothing thyself for a while. She’s right.

I think we are all right. Booman’s right. Cannon’s right. Lambert’s right. Jeralyn’s right. kevin k is r.. r.. right. Murphy is right. Paul Lukasiak is right. Lawnguylander is wrong.

We are also wrong because our remedies are unlikely to be suitable for each and every situation. That’s not a matter of fault; it’s simply a matter of fact because none of us has a God’s eye view. In other words, our degree of rightness and wrongness depends on the fit of our imperfect knowledge to the situation at hand.

That we are fallible should make us act with more humility, however, in the real world humility tends to suffer under power. This is one of the reasons I like to humble power. It’s why I’m often humbled. This said, it’s easy to misidentify the problem or choose the wrong solution. It is the human condition.

What should we do if the heat is too high and we’re overcooking the dish?

What ought we to do to lower the pressure? If you think lowering the pressure is what we ought to do, and you are not sure of how to act, then I recommend searching the sensus communis for whatever answers you think best explain the situation, especially those that appear to offer effective prescriptions. This said, to make a tasty dish out of the “goods” we’ve been given is going to take some heat and some pressure. If we can get the temperature and pressure right, hopefully we can create a dish that is suited for most diets and palates.

digg!!! tweet!!! share!!!

Add to: Facebook | Digg | Del.icio.us | Stumbleupon | Reddit | Blinklist | Twitter | Technorati | Furl | Newsvine

Good morning Conflucians! Today is September 11, but there doesn’t seem to be a lot of focus on that grim anniversary in the major newspapers. The New York Times has a couple of articles. The first is about fears that never materialized:

Remembering a future that many feared

So much has been said and written about what happened on 9/11. The following day is forgotten, just another dulled interlude in the aftermath of an incoherent morning.

But New Yorkers were introduced that day to irreducible presumptions about their wounded city that many believed would harden and become chiseled into the event’s enduring legacy.

New York would become a fortress city, choked by apprehension and resignation, forever patrolled by soldiers and submarines. Another attack was coming. And soon.

Tourists? Well, who would ever come again? Work in one of the city’s skyscrapers? Not likely. The Fire Department, gutted by 343 deaths, could never recuperate.

If a crippled downtown Manhattan were to have any chance of regeneration, ground zero had to be rebuilt quickly, a bricks and mortar nose-thumbing to terror.

Eight years later, those presumptions are cobwebbed memories that never came to pass. Indeed, glimpses into a few aspects of the city help measure the gap between what was predicted and what actually came to be.

The second piece is about therapists who dealt with mental health issues that arose for people after 9/11/2001:

A trauma that rippled outward

Dr. Kane is a psychologist. She works a great deal with the dying and the grieving. It was thus not surprising that people, dozens of them, would turn to her after losing relatives or friends at the World Trade Center.

“I always try to leave some space in my practice for nice, normal neurotic people, so that my whole day isn’t just death and dying,” Dr. Kane said. That was not possible after the Sept. 11, 2001, attack. “It was death, day in and day out,” she said. “I would be in the office from 8 in the morning till 8 at night dealing with dead people and bereaved people — all day long for more than a year.”

Her work took its toll. It was nothing like what her patients endured, but it was no walk in the park, either. She would cry on the way home from work. Pain crept into muscles and bones. And she came to understand that, for all her training, “I was ill equipped for how to deal with that kind of trauma that I saw.”

At the Washington Post, there is a really depressing article about teaching high school kids about 9/11–kids who have no memories of that day only eight years ago.

9/11 as a lesson, not a memory

VINCENNES, Ind. The students filed into their social studies class just after lunch and slumped into desks where they had learned about the Civil War, Lewis and Clark, and the bombing of Pearl Harbor. On this day, teacher Michael Hutchison said, the class would feature “another of those huge moments in our history.” He reminded the high school juniors and seniors that he would be grading their notes. Then he dimmed the lights and played a video on the classroom TV.

Some students set backpacks on their desks to use as pillows, and others pulled the hoods of their sweat shirts low over their eyes. “Nap time,” one of them said. Meanwhile, on the screen at the front of the room, a skyscraper burned. A woman screamed. A tower crumbled. A mother sobbed as she recalled her son’s final words.

“There was a fire,” one student wrote in his notes.

“People died and went missing,” scribbled another.

“It was an example of ‘terrorism,’ ” wrote a third.

And to think some of these kids will probably be sent to fight in two wars that Bush and Cheney ginned up because of the events of 9/11, and that are still dragging on with no end in sight.

And now, for those who want to make fun of me for wanting a serious 9/11 investigation, this story was published on September 12, 2001:

“We predicted it”

A bipartisan commission warned the White House and Congress that a bloody attack on U.S. soil could be imminent. Why didn’t anyone listen?

They went to great pains not to sound as though they were telling the president “We told you so.”

But on Wednesday, two former senators, the bipartisan co-chairs of a Defense Department-chartered commission on national security, spoke with something between frustration and regret about how White House officials failed to embrace any of the recommendations to prevent acts of domestic terrorism delivered earlier this year.

Bush administration officials told former Sens. Gary Hart, D-Colo., and Warren Rudman, R-N.H., that they preferred instead to put aside the recommendations issued in the January report by the U.S. Commission on National Security/21st Century. Instead, the White House announced in May that it would have Vice President Dick Cheney study the potential problem of domestic terrorism — which the bipartisan group had already spent two and a half years studying — while assigning responsibility for dealing with the issue to the Federal Emergency Management Agency, headed by former Bush campaign manager Joe Allbaugh.

The Hart-Rudman Commission had specifically recommended that the issue of terrorism was such a threat it needed far more than FEMA’s attention.

Before the White House decided to go in its own direction, Congress seemed to be taking the commission’s suggestions seriously, according to Hart and Rudman. “Frankly, the White House shut it down,” Hart says. “The president said ‘Please wait, we’re going to turn this over to the vice president. We believe FEMA is competent to coordinate this effort.’ And so Congress moved on to other things, like tax cuts and the issue of the day.”

“We predicted it,” Hart says of Tuesday’s horrific events. “We said Americans will likely die on American soil, possibly in large numbers — that’s a quote (from the commission’s Phase One Report) from the fall of 1999.”

On Tuesday, Hart says, as he sat watching TV coverage of the attacks, he experienced not just feelings of shock and horror, but also frustration. “I sat tearing my hair out,” says the former two-term senator. “And still am.”

Afghanistan

Lately we don’t hear much about Iraq–the focus is on Afghanistan. And there doesn’t seem to be a lot of support for Obama’s war among Democrats.

New York Times: Obama Facing Doubts Within His Own Party on Afghanistan

LA Times editorial: Is Afghanistan still worth it?

And a breaking story on the Armor Group scandal from Spencer Ackerman: Whistleblowers Unveil More ArmorGroup Allegations

Former employees of ArmorGroup, the private security company that holds a State Department contract to protect the U.S. Embassy in Kabul, unveiled new allegations against the besieged contractor a week after photographic evidence emerged of its guards engaged in physical and sexual harassment. In a press conference revolving around an unlawful-termination lawsuit filed against ArmorGroup, former senior company officials said ArmorGroup was aware of widespread fraud; intentional use of non-English speaking guards to save money at the expense of embassy security; operations of a shell corporation in order to win contracts intended only for American companies; and even involvement in prostitution — and that the State Department knew about at least some of the company’s illicit practices.

The response from the administration: POGO reacts to Armor Group whistleblower lawsuit

Taliban leader arrested

http://www.guardian.co.uk/world/2009/sep/11/swat-taliban-leader-arrested

Gates: It’s not time to leave Afghanistan

Facing eroding public support for the war in Afghanistan, Defense Secretary Robert Gates said Thursday that the Obama administration’s effort in the 8-year-old conflict is “only now beginning.”

It looks like Afghanistan couold turn into Vietnam. It’s time to get out of both Afghanistan and Iraq, IMHO.

Health Care Mess

Here is the most realistic article I found (thanks to SHV!) Obama seeks to reassure insurance companies, Republicans in speech to Congress on health care

President Barack Obama’s nationally televised address to a joint session of Congress Wednesday night, billed as an effort to explain his health care proposals to the American people, was largely devoted to reassuring the health care industry and conciliating his Republican opponents.

Obama sought to repackage his proposed overhaul of health care to better conceal from the public its reactionary content, but the bulk of his speech focused on the need to slash health care costs, both those borne by private companies and government outlays for Medicare and Medicaid, the government programs for the elderly and the poor.

The New York Times has this delusional editorial. I don’t know where they’re getting this stuff out of what Obama said.

In the moving peroration of his speech to Congress Wednesday night, President Obama cast health care reform as a moral issue that reflects on the character of our country. He also made clear that there are some problems that are too big for individuals to solve on their own — and that guaranteeing that all Americans have access to health care is one of them.

[....]

The health care reform plan that President Obama and many Democrats in Congress are calling for could do a lot to reduce Americans’ vulnerability and stem that tide. Likely reforms would require employers to provide health benefits to their workers or pay a fee to help cover them elsewhere, thus slowing the erosion of employer coverage. Reform would also expand Medicaid to cover more poor people, create exchanges where people without group coverage at work could buy affordable policies and receive subsidies based on their incomes and prohibit insurance companies from denying coverage or charging exorbitant rates based on medical conditions.

I’ll believe that when I see it. Here’s an op-ed that is a little more realistic.

Bring on the Democratic Budgeteers

What many lawmakers, especially Democrats, wanted to hear most from the president Wednesday night were specifics – definitive policy positions that would help resolve lingering disagreements within the Democratic Party.

And arguably the most important specific point Mr. Obama made was to support new fees or taxes on high-end insurance plans as a way to pay a big part of the overhaul’s cost.

In doing that, the president sided firmly with negotiators on the Senate Finance Committee, including its chairman Max Baucus, Democrat of Montana. And it was an implicit rebuff to a plan by the House Ways and Means Committee to impose a surtax on high-income Americans.

For that matter, the promise to bring his blockbuster bill in at just $900 billion put the president more in league with Baucus & Friends, than with the House, where Democrats have projected a cost projection of more than $1 trillion.

Patients without borders: the rise of Mexican medical tourism

The city of 1.6 million is one of a few Mexican border towns quietly promoting state-of-the-art hospitals that cater to international patients–Juárez has five such facilities–and betting that refugees from the tattered U.S. health care system will come. On paper, at least, the numbers look promising: According to a 2008 study by Deloitte LLP, 750,000 Americans traveled abroad for medical care in 2007. That number is expected to reach six million by 2010.

Economy

Millions more thrust into poverty

A new comprehensive economic survey shows that the recession has plunged 2.6 million more Americans into poverty, wiped out the household income gains of an entire decade and pushed the number of people without health insurance up to 46.3 million.
The grim economic statistics unveiled Thursday in the Census Bureau’s annual report on income, poverty and health insurance are destined to grow bleaker. Since the data were collected in the spring, millions of people have lost their jobs.

“When the numbers come out next year at this time, I expect them to look even worse,” said Robert Greenstein, executive director of the left-leaning Center on Budget and Policy Priorities.

Chris Dodd positioned to run on Wall Street Crack down

Sen. Chris Dodd’s decision to remain chairman of the Senate Banking, Housing and Urban Affairs Committee increases the odds that regulatory reform will get through Congress this year — if only because Dodd would like to tout a crackdown on Wall Street as he campaigns for reelection next year.

“He’s going to try and polish his consumer protection creds and run on that as part of his reelection campaign,” predicted Brian Gardner, an analyst with Keefe, Bruyette & Woods and a former GOP Hill staffer, who read Dodd’s decision as a signal the committee will move more aggressively than most analysts thought on regulatory reform.

Again, I’ll believe it when I see it. Next, a really bad joke of a story from USA Today: Obama advisers: 1M jobs saved or created

Give me a break! How many jobs have we lost now? 7 million?

Top Dems Renew Call for Cramdown

The White House program designed to prevent foreclosures by paying banks to alter loans voluntarily isn’t doing nearly enough to keep struggling borrowers in their homes, several powerful Democrats charged Wednesday. Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, and Richard Durbin (Ill.), the Senate’s No. 2 Democrat, are threatening to renew the push to empower homeowners to escape foreclosure through bankruptcy — a proposal that’s anathema to the banks and their congressional defenders.

In March, the Obama administration launched a program providing $75 billion in carrots to banks that make mortgages more affordable. While administration officials say the program is right on track, the number of modifications lags far behind new foreclosure filings. Indeed, the Treasury Department released figures Wednesday revealing that the voluntary initiative has encouraged roughly 360,000 trial modifications since the program began. Meanwhile, foreclosure filings topped 360,000 in July alone, according to RealtyTrac, an online foreclosure tracker. The figures, many lawmakers and consumer groups contend, are indication that leaving the modifications to the fancy of the banks won’t stem the foreclosure crisis, which was at the root of the past year’s financial meltdown and threatens to prolong it.

“Waiting for banks to ‘volunteer’ to end this foreclosure crisis is a waste of time,” Durbin said in a statement Wednesday. “Treasury’s latest report show[s] this approach has failed miserably.”

Durbin is calling on Treasury Secretary Tim Geithner “to sit down with congressional leadership and work to end this blight on our economic future.”

Odds and Ends

IAAF urges caution over Semenya intersex claims

The Sydney Morning Herald in Australia and The Sun newspaper in Britain reported that gender tests ordered by the International Association of Athletics Federations (IAAF) show the 18-year-old [Caster Semenya] is a hermaphrodite.

Neither paper named the source of their information. IAAF spokesman Nick Davies would not discuss the findings with CNN. “I simply haven’t seen the results,” Davies said.

“We have received the results from Germany, but they now need to be examined by a group of experts and we will not be in a position to speak to the athlete about them for at least a few weeks.

“After that, depending on the results, we will meet privately with the athlete to discuss further action.”

Caster Semenya is not a unique case

KIRSTEN AIKEN: Caster Semenya looks almost certain to keep her World Championship gold medal, regardless of the results of gender verification tests.

Not so lucky – the Indian athlete Santhi Soundararajan who was stripped of her silver medal from the 2006 Asian Games in Doha Qatar after officials told her she possessed male characteristics.

Fixed-up Hubble telescope spots distant stardust

“The telescope was given an extreme makeover and now is significantly more powerful than ever, well-equipped to last into the next decade,” Ed Weiler, associate administrator for NASA’s Science Mission Directorate, said at a news conference.

The newly installed Cosmic Origins Spectrograph got detail data on a galaxy called Markarian 817 being pulled into a supermassive black hole, and an exploded star in the Large Magellanic Cloud that are both spewing matter into space.

“We believe that most of the matter in space is actually wispy filaments between the galaxies,” James Green of the University of Colorado told the news conference. Hubble is making these wisps visible for the first time.

The spectral imager detected oxygen, nitrogen and carbon. “The elements of life are being produced in stars … but they are also being distributed through the cosmos,” Green said.

Another star has jets, material being blasted out “from what probably is going to be a planetary system by the time this thing settles down,” said Bob O’Connell of the University of Virginia.

Another one? Man with gun arrested during Obama speech

U.S. Capitol Police have arrested a Virginia man they say tried to drive into a secure area near the Capitol with a shotgun and rifle in his car as the president gave his health care address to Congress.

Joshua Bowman, 28, of Falls Church, Va., was arrested around 8 p.m. Wednesday and charged with two counts of possession of an unregistered firearm and one count of unlawful possession of ammunition. Each carries a possible one-year jail sentence and $1,000 fine.

Bowman’s intentions were unclear, said police spokeswoman Sgt. Kimberly Schneider, but the U.S. Attorney’s Office in Washington decided against prosecuting him on more serious charges, said spokesman Benjamin Friedman.

I just love this story! I’ve always been fascinated by altered states.

Adventures with Mazatec Mint: Exploring the Mind-Bending World of Salvia Divinorum

Within around thirty seconds of smoking the dark herbal extract the effects rapidly began, and I felt my entire sense of identity suddenly shift. I was instantly transformed from a human being into a tiny disembodied speck of consciousness — completely bewildered as to what I was and amnesic of my former identity. I was suspended in a hyperspatial dimension, a crystalline network of pulsing energies, that was filled with countless other miniature beings like me. I found myself inside of a kind of space within space, that appeared to transcend the whole three-dimensional universe. Suddenly, my identity shifted again, as a portion of the space and beings around me folded and twisted into me, becoming a part of me. More and more layers of the space around me continued folding in and becoming a part of my expanding sense of identity — until, finally, I was my familiar human self again. This strange and somewhat unsettling experience was the result of my smoking an extract made from the hallucinogenic leaves of the Salvia divinorum plant.

From the world of archaeology: Most ancient colored twine found:

A Georgian cave has yielded what scientists say are the earliest examples of humans making cords.

The microscopic fibres, discovered accidentally while scientists were searching for pollen samples, are around 30,000 years old.

A team reports in the journal Science that ancient humans probably used the plant fibres to carry tools, weave baskets or make garments.

Some of the fibres are coloured and appear to have been dyed.

The fibres were discovered preserved within layers of mud in Dzudzuana Cave in Georgia.

Have a fabulous Friday folks!!

digg!!! share!!! tweet!!!

Add to: Facebook | Digg | Del.icio.us | Stumbleupon | Reddit | Blinklist | Twitter | Technorati | Furl | Newsvine

O.K. Rowboats don’t have hatches, but Orrin Hatch is a creature and a feature of the ship of state and it is people of his intellectual and moral quality who are spinning the boat in circles when it’s clearly in need of proper direction. In fact, abandoning the first metaphor, they’ve piloted the US up the creek to where it is today. When you’re up this creek, you need a paddle, not an Orrin.

In response to Charles Schumer’s statement, that the Democrats can pass healthcare reform without Republican support:

Sen. Orrin Hatch (R-Utah), who joined Schumer on the show, said Democrats should not try to use reconciliation to force through a bill which could not overcome a filibuster in the Senate.

“If they use that, that would be an abuse of the process,” Hatch said. He also said creating a government health plan open to all would be a grave mistake. “If we do that, we’ll bankrupt the country.”

Earth to Orrin. What do you think you’ve been actively working at for the last 8 years? What do you think lying to the public to make a war in Iraq, and loosely regulating the financial community, have to do with the current economic situation?

The Republican Party set the stage for bankrupting the nation by adopting neo-conservatism as its political philosophy. Neo-conservatism, which is conservatism without moral and intellectual grounding, is bankrupt at the conceptual level, so it’s hardly surprising that Bush’s application of its principles gutted the economy of the nation. It’s also why so many Republicans continue working to bankrupt the nation by applying the principles they say prevent bankruptcy.

Ideologues whose brains can’t get beyond binaries are incapable of accepting the empirical world when it conflicts with their beliefs. One such belief is that public healthcare would bankrupt the economy, when every study ever published in The New England Journal of Medicine on the topic shows that public healthcare is more efficient and cost effective than private healthcare.

With people like Orrin at the helm, there is no reason to wonder why the country is up the creek. I can think of at least two good uses for a paddle.

Please Digg!!! Tweet!!!  Share!!!

Add to: Facebook | Digg | Del.icio.us | Stumbleupon | Reddit | Blinklist | Twitter | Technorati | Furl | Newsvine

Timothy Geithner’s profanity-laced rant against Sheila Bair and Mary Shapiro for their rational, reality-based concerns about increasing the power of Federal Reserve Bank, as opposed to increasing oversight of the system, should elicit a kind of déjà vu because the scenario has been played before. (Note: Increasing oversight does not mean policy disclosure.)

In 1997-8, Brooksley Born, the head of the Commodities Futures Trading Commission, tried to open a discussion about introducing oversight measures into the OTC derivatives market by producing a memo because she could see that:

“There was no transparency of these markets at all. No market oversight. No regulator knew what was happening,” Born says. “There was no reporting to anybody.”

Summers, Rubin’s deputy (and now director of the National Economic Council), said the memo had “cast the shadow of regulatory uncertainty over an otherwise thriving market, raising risks for the stability and competitiveness of American derivative trading.”

History, in the form of the role these derivatives played in this economic disaster, has proven that she was right to undertake that initiative. Unfortunately, Greenspan, Leavitt, Rubin, and Summers, to name some major players, were effective in pushing legislation that ended the CFTC’s ability to undertake oversight.

Born assailed the legislation, calling it an unprecedented move to undermine the independence of a federal agency. In eerily prescient testimony, she warned of potentially disastrous and widespread consequences for the public. “Losses resulting from misuse of OTC derivatives instruments or from sales practice abuses in the OTC derivatives market can affect many Americans,” she testified that July. “Many of us have interests in the corporations, mutual funds, pension funds, insurance companies, municipalities and other entities trading in these instruments.”

Notwithstanding, her concerns were dismissed and her ominous predictions came to pass.

Geithner is a protégé of Summers.

Is it not an ironic twist of fate, and a testament to Geithner’s blind faith against oversight, that he, like his mentor before him, is assailing intelligent, moral, qualified women for pointing out the  folly of his ways.

{Note: I defer all economic inquiries to our resident expert, Dakinikat.  My interest in the situation is the social dynamic.}

Digg!!! Share!!! Tweet!!!

Add to: Facebook | Digg | Del.icio.us | Stumbleupon | Reddit | Blinklist | Twitter | Technorati | Furl | Newsvine

From Brad DeLong: http://delong.typepad.com/sdj/2009/07/bad-news-about-industrial-production-sigh.html

Here’s a trajectory for POTUS to chew on from the recently released statistics on Industrial Production and Capacity. This is a key indicator of an economy’s well being.   It’s down again. There’s something about Obama’s use of the words “right trajectory” on Anderson Cooper the other night that makes me think he should ask Harvard to give him a bit of a refund on that ‘education’.  How hard is to understand that when  production keeps falling that is not a good trend?  He’s had to have the inside scope on these numbers for at least a week.  Why give Cooper and the world the impression of something else?

Industrial production decreased 0.4 percent in June after having fallen 1.2 percent in May. For the second quarter as a whole, output fell at an annual rate of 11.6 percent, a more moderate contraction than in the first quarter, when output fell 19.1 percent. Manufacturing output moved down 0.6 percent in June, with declines at both durable and nondurable goods producers. Outside of manufacturing, the output of mines fell 0.5 percent in June, and the output of utilities increased 0.8 percent. The rate of capacity utilization for total industry declined in June to 68.0 percent, a level 12.9 percentage points below its average for 1972-2008. Prior to the current recession, the low over the history of this series, which begins in 1967, was 70.9 percent in December 1982.

The graph (which uses seasonally adjusted data) comes from Brad Delong’s “Bad News About Industrial Production”. I would imagine his education taught him the right frame for what is the ‘right trajectory’ and the ‘wrong trajectory’ when discussing macroeconomics with his UC Berkely Students. I know my economics professor Campbell R. McConnell taught me well at the more humble University of Nebraska where I cut my economist baby teeth. Now, I know we’re supposed to be a service economy and that things like manufacturing, transportation and mining aren’t supposed to be relevant to us any more. I still can’t help asking how many young people with nothing more than a devalued high school diploma would rather face a life building cars than mowing the lawns of Goldman Sachs Bankers? Is any one beginning to have similar questions on the mythical hope and change meme of last year?  Is it still just you and me?  The Sinoperuvian lesbians of hillbilly America?

Today, even the editorial page of the Gray Lady even asked the right questions.

Unemployment is rising. Foreclosures are surging. Lending is still constrained. So why exactly is the Obama administration waiting to act?

Their answer is not so different from mine of the past two days.

If wait-and-see is anything other than a near-term tactic, it’s bound to be a miscalculation. The need for expanded relief and recovery efforts is compelling. Rather than avoid those fights, the Obama team must win them.

The Index of Industrial Production is a key leading indicator of macroeconomic health. It is released monthly by the Fed. “The indicator measures the amount of output from the manufacturing, mining, electric and gas industries. The reference year for the index is 2002 and a level of 100.” It is sitting now at 95.4 (which of course is less than 100) which means it’s lower than it was when the index was set. It measures REAL production output. This means were producing less stuff and of course, that means there are less people necessary to hired to produce less stuff. That’s not good.

Another number was released today. That would be the measure of Consumer Price changes (CPI) or the measure of inflation faced by households. This has another unhelpful trajectory. It is up and mostly by way of higher gas prices, clothes, and other things. High petroleum prices also play into higher costs for businesses which will adjust production downward when faced with higher transportation and energy costs. While this index doesn’t address the prices faced by businesses directly, there is of course some carry-over when businesses face retail gas prices and electricity prices. Here’s some info on that from the WSJ. There’s a pretty good break down there of what exactly you are paying more for. Automobiles are not one of those things. Their prices fell at annual rates not seen since the Truman years.

While up, the increase in prices is not going to trigger Fed Inflation fears yet since it within their boundary of acceptable levels of inflation. I’m not sure that’s worth much to most of us however, given this:

In a separate report, the Labor Department said the average weekly earnings of U.S. workers, adjusted for inflation, plunged 1.2% in June, an indication that paychecks didn’t even come close to keeping pace with consumer prices.

So, let’s get this all into a little package we can deal with. You’re being paid less, but your basic expenses are going up. You’re really fortunate to have a job right now and even more fortunate to have health insurance. But don’t count on these too much, because both of those situations will get worse before they get better. You could potentially buy a new car, if you had a job or if you weren’t swimming in record levels of debt already for all those Chinese goods you bought by credit a few years ago. You used to feel pretty good about your retirement and the nest egg you have in your house, but the last ten year’s of their appreciation and return just disappeared. You’re facing higher taxes, but it’s not because you’re getting huge bonuses unless your working for Goldman Sachs which is made money this year on the bargain basement sell off of AIG stuff to them using tax dollars we know don’t have to pay for unemployment insurance, social security, and Medicaid and Medicare. There will be fewer policemen and firefighters on the street. Your younger children will sit in much more crowded classrooms. The banks are still profiting from the incredible student loans your will be saddled with through most of their adult lives by attempting to get up there to something remotely resembling middle class life.

Oh, and there’s this.

With inflation seemingly under wraps and the economy still mired in recession, Fed officials are widely expected to keep official interest rates near zero into 2010.

But then, that makes no difference because the banks are killing you with fees and your credit card companies are kicking up your interest rates because they couldn’t figure out good risk from bad. You have to pay twice over for their bad decisions and their political contributions. It also means if you attempt to save, you might as well do it in a mattress because you’re not going to get any rate of return. If you look at bonds, beware, because low interest rates mean high bond prices, and you don’t want to be caught buying high priced bonds whose value falls when interest rates do start rising.

Meanwhile, Paul Krugman explains it all yet again in his blog post “Deficits saved the World.” Do we need a second stimulus?  Hell yes!  Chew on this quote for awhile then go look at the supply and demand curves if you really want to do it in the wonk zone.  Automatic Stabilizers means all those programs like unemployment insurance that didn’t exist prior to FDR and the Great Society programs.  This says it all.  It’s not the Obama stimulus package that has kept us near the edge, it was the programs put into place way back then that have kept us from going all the way over like we did in the 1930s.

That’s an interesting way to think about what has happened — and it also suggests a startling conclusion: namely, government deficits, mainly the result of automatic stabilizers rather than discretionary policy, are the only thing that has saved us from a second Great Depression.

Just imagine what it would mean if we really had a visionary in the office?  Meanwhile, some one needs to send a message to the White House. It’s the JOBS stupids!!!!!!

DIGG!!! TWEET!!! SHARE!!!

Add to: Facebook | Digg | Del.icio.us | Stumbleupon | Reddit | Blinklist | Twitter | Technorati | Furl | Newsvine

DeLong skewers the the Stimulus Plan Claim via the Unemployment rate with stylized facts

With the release of financial regulation reform and healthcare reform that has Wall Street breaking open the bubbly, I just want to join the chorus of highly skeptical economists.  The tune of the last few days is hard to miss.  Take this piece from the NY Time’s Dealbook as an example:  Only a Hint of Roosevelt in Financial Overhaul.  There’s also Paul Krugman’s Op-Ed Column today Out of the Shadows which is the typical on-the-one-hand-on-the-other hand economist behavior.  (Could I just mention in passing that I like the OLD Paul better?  The one that was an out spoken advocate for liberal economists?  I’m not sure what happened at that White House Dinner, but I’m beginning to think we now have a Manchurian economist at Princeton. Oh, where is our Shrill One?)   Oh, and you can still read my first impressions here. I’m going to start with Financial Reform but don’t leave me yet.  Brad deLong takes on Christine Romer’s The Lessons of 1937 at The Economist and since he still hasn’t been invited to dinner at the White House, it’s classic Brad.

So what does Krugman think about the Alphabet Soup Agency reheat slugging its way through that perpetual Hall of Wall Street minions we know as our Congress?  He believes that it throws some light on the shadow banking industry in that the Alphabet Soup gang at the FED get to see more balance sheets and books.  There is also a stab at standardizing the process, but custom fitted Credit Default Swaps remain.  The essential riskiness remains.  Let’s examine the Krugman critique.

But what about the broader problem of financial excess?

President Obama’s speech outlining the financial plan described the underlying problem very well. Wall Street developed a “culture of irresponsibility,” the president said. Lenders didn’t hold on to their loans, but instead sold them off to be repackaged into securities, which in turn were sold to investors who didn’t understand what they were buying. “Meanwhile,” he said, “executive compensation — unmoored from long-term performance or even reality — rewarded recklessness rather than responsibility.”

Unfortunately, the plan as released doesn’t live up to the diagnosis.

Well, maybe the White House Pastry chef did not completely overwhelm the shrill one.

Tellingly, the administration’s executive summary of its proposals highlights “compensation practices” as a key cause of the crisis, but then fails to say anything about addressing those practices. The long-form version says more, but what it says — “Federal regulators should issue standards and guidelines to better align executive compensation practices of financial firms with long-term shareholder value” — is a description of what should happen, rather than a plan to make it happen.

Furthermore, the plan says very little of substance about reforming the rating agencies, whose willingness to give a seal of approval to dubious securities played an important role in creating the mess we’re in.

In short, Mr. Obama has a clear vision of what went wrong, but aside from regulating shadow banking — no small thing, to be sure — his plan basically punts on the question of how to keep it from happening all over again, pushing the hard decisions off to future regulators.

Andrew Ross Sorkin at the Dealbook is not a fan either.

Three-quarters of a century ago, Roosevelt earned the undying enmity of Wall Street when he used his enormous popularity to push through a series of radical regulatory reforms that completely changed the norms of the financial industry.

Wall Street hated the reforms, of course, but Roosevelt didn’t care. Wall Street and the financial industry had engaged in practices they shouldn’t have, and helped lead the country into the Great Depression. Those practices had to be stopped. To the president, that’s all that mattered.

By comparison, the Obama plan is little more than an attempt to stick some new regulatory fingers into a very leaky financial dam rather than rebuild the dam itself, the columnist says. Without question, the latter would be more difficult, more contentious and probably more expensive.

The article basically reviews the assessment of the plan by The New York Times’s Joe Nocera.  It really couldn’t  be more spot on even if it tried much harder.  As you can read in my first thoughts and anything I wrote slightly earlier, I hate the idea of leaving ‘too big too fail, too big too restructure’ institutes unscathed but regulated.  This issue still looms in the room like the Ghost of Financial Crises Future.

Yet the Obama plan accepts the notion of “too big to fail” — in the plan those institutions are labeled “Tier 1 Financial Holding Companies” — and proposes to regulate them more “robustly,” Mr. Nocera says. The idea of creating either market incentives or regulation that would effectively make banking safe and boring — and push risk-taking to institutions that are not too big to fail — isn’t even broached, he says.

Again, Nocera has a thing against customized derivatives which are left in the mix.  This, again, is another area that I felt was a complete sell out to the boys in blue suits.

Or take derivatives. The Obama plan calls for plain vanilla derivatives to be traded on an exchange. But standard, plain vanilla derivatives are not what caused so much trouble for the world’s financial system, Mr. Nocera says. Rather it was the so-called bespoke derivatives — customized, one-of-a-kind products that generated enormous profits for institutions like A.I.G. that created them, and, in the end, generated enormous damage to the financial system, he writes. For these derivatives, the Treasury Department merely wants to set up a clearinghouse so that their price and trading activity can be more readily seen, Mr. Nocera says. But, he notes, it doesn’t attempt to diminish the use of these bespoke derivatives.

So, in other, is this really an FDR moment news, Dr. Christine Romer (for sure a great economist) wrote an article arguing that we should not repeat the mistakes of 1937.  Those would be the mistakes that have driven fresh water economists to the conclusion that none of the Keynesian-like fiscal stimulus got us out of  The Great Depression. Those actions worked but other actions  put the country into a second dip.  Basically, the fresh water argument denies how policy emphasis shifted to the deficit so they instituted tax increases and also how the Fed exercised some tight monetary policy without any real grasp of what it was doing and caused another downturn.

The recovery from the Depression is often described as slow because America did not return to full employment until after the outbreak of the second world war. But the truth is the recovery in the four years after Franklin Roosevelt took office in 1933 was incredibly rapid. Annual real GDP growth averaged over 9%. Unemployment fell from 25% to 14%. The second world war aside, the United States has never experienced such sustained, rapid growth.

However, that growth was halted by a second severe downturn in 1937-38, when unemployment surged again to 19% (see chart). The fundamental cause of this second recession was an unfortunate, and largely inadvertent, switch to contractionary fiscal and monetary policy. One source of the growth in 1936 was that Congress had overridden Mr Roosevelt’s veto and passed a large bonus for veterans of the first world war. In 1937, this fiscal stimulus disappeared. In addition, social-security taxes were collected for the first time. These factors reduced the deficit by roughly 2.5% of GDP, exerting significant contractionary pressure.

UC Berkley’s Dr. Brad deLong says you saw the lessons but are you really applying them?.  Both articles are wonky but readable and I would really recommend you try to make your way through them. You’ll learn a lot about the Great Depression.  He thinks the Obama administration is trying to fly the victory banner way too soon and risks making things a lot worse.  His arguments are just laden with things you really should know about early attempts at macroeconomics.  I’m only putting his bottom line out but please read the entire thing.

[t]he 1937 episode provides a cautionary tale. The urge to declare victory and get back to normal policy following an economic crisis is strong. That urge needs to be resisted until the economy is again approaching full employment. Financial crises, in particular, tend to leave scars that make financial institutions, households and firms behave differently [than in normal times]. If the government withdraws support too early, a return to economic decline or even panic could follow…

The blunt fact is that the economic recoveries that have been rapid and seen fast growth in employment are those that ended when a Federal Reserve following strongly restrictionary policies to fight inflation eased off and significantly lowered interest rates. No such lowering of interest rates is possible this time–interest rates are already as low as they can possibly go at the short end. So I can see no reason to anticipate a rapid recovery and employment when the cliff-diving stops. And I do not understand why the Obama administration is following policies that presume such a rapid recovery–a V rather than an L for the shape of the recession–is not just possible but probable.

I would also recommend checking out his analysis at The Week where he argues that we are still living the Wall Street Fairy Tale.  As I said, I’m sending up pleas to the Greater Ethos that Brad doesn’t get invited to White House dinners because since the semester ended, Brad’s on fire. You have to just love the headline, but the arguments are even better.

The story we tell ourselves about what happened to the financial markets last fall is vitally important. It will determine what form financial market regulation takes in the next few decades, and how vulnerable we will be to the next disruption. At this moment, a relatively calm one, a fictional version of last fall’s events is gaining traction.

He provides a short, succinct version of the facts and an even nice description of the spin.  The spin is extremely important to unmask as that reform bill winds its way through the Halls of Wall Street minions.

The fact that the rescue of the banking system took the form of nationalization of AIG, and the honoring of its paper, rather than equity investments by the government in the banks, and the discounting of AIG paper, has encouraged a bout of revisionism in which most of Wall Street and at least a third of Congress now embrace a fairy tale. They tell themselves—and us—a story of a banking system that was fundamentally sound, that merely needed a little temporary liquidity to tide itself over a panic. But the true story is one of an overleveraged banking system that was insolvent save for a $300 billion gift from American taxpayers.

If I haven’t turned you into an amateur economist yet, these links will surely give you that nudge.  Check them out because our taxpayer dollars depend on a populace armed with the facts.

Please Digg!!! Share!!! Tweet!!!

Add to: Facebook | Digg | Del.icio.us | Stumbleupon | Reddit | Blinklist | Twitter | Technorati | Furl | Newsvine

But the poll suggests Mr. Obama faces challenges on multiple fronts, including growing concerns about government spending and the bailout of auto companies. A majority of people also disapprove of his decision to close the military prison at Guantanamo Bay, Cuba.

Nearly seven in 10 survey respondents said they had concerns about federal interventions into the economy, including Mr. Obama’s decision to take an ownership stake in General Motors Corp., limits on executive compensation and the prospect of more government involvement in health care. The negative feeling toward the GM rescue was reflected elsewhere in the survey as well.

A solid majority — 58% — said that the president and Congress should focus on keeping the budget deficit down, even if takes longer for the economy to recover.

Laura Zamora, 40, of Orange, Calif., voted for Mr. Obama but says she is frustrated by the economy and finds her support for the president waning. She says she’s facing a possible layoff as a local government worker in California.

“He’s bailing out the private sector. He’s putting all kinds of money into the private sector,” says Mrs. Zamora. “The money should be going to social programs, not to bailing out banks and GM. It should go to people who are unemployed.”

The survey of 1,008 adults, conducted Friday to Monday, had a margin of error of plus or minus 3.1 percentage points for the full sample.

The poll shows as the economy really worsens, people are becoming more reality-based. Speaking of reality based, let’s get back to numbers that show the public’s concerns are much warranted. You will not want to miss this VOXEU study showing what two economists found when comparing the Great Depression to the current Great Recession. They’ve charted the numbers back-to-back and are even going as far as saying that we are in a Global economic Depression. You really need to check the graphs and the analysis out in “A Tale of Two Depressions”. Dr. Barry Eichengreen and Dr. Kevin O’Rourke are both research/historical economists and bring the stylized facts home.

Certainly any one who sees green shoots in these fundamentals must be smoking them. Here’s Wolf’s synopsis.

Kenneth Rogoff, Harvard professor of both Public Policy and Economics, discusses the one statistic that is booming in the U.S. Economy; the budget deficit. This is also a commentary published by the Financial Times. Rogoff weaves the story of the exploding deficit into a bigger picture of coming deficits in Medicare and eventually Social Security. He focuses on the noticeable lack of trust in our biggest investors, the Chinese and our desire to work out issues with health care. He speaks to funding for health care as well as these other issues. His bottom line is equally depressing and scary.

All of these considerations appear to underscore the importance of finding ways to keep the new health plan from being overly burdensome, and to avoid unduly optimistic projections on efficiency savings. Healthcare reform is no substitute for finding a credible path to fiscal sustainability. If badly handled, it could prove the straw that breaks the camel’s back.

Make no mistake, the US and much of the developed world is in a frighteningly precarious fiscal state. Exploding debt levels have remained manageable in no small part thanks to the extraordinarily low level of global real interest rates. Should the general level of global interest rates rise substantially, perhaps owing to a pick-up in emerging market growth over the next few years, a number of developed countries, including the US, may have to tighten their belts sharply in order to maintain stable debt ratios. Countries that fail to do so will suffer severe consequences, including spiralling interest rates and, ultimately, default by direct means or through high inflation.

It is a disgrace that the world’s richest country cannot provide reliable basic care for its poorest citizens. But if the politics of reform produces too extravagant a plan when the nation’s fiscal health is already so weak, the US may experience a form of financial crisis even more virulent than the one it is recovering from. Any healthcare plan would then be dead on arrival.

Each of these economists bring up the tremendous challenge facing our world and our country in the economic front. This begs the question are we currently up to the challenge? We continue to face an administration that is in complete denial about the systemic problems with the financial system whose policy continues to enable big finance. The political system and the health care lobby (which of course includes both the AMA and the private insurance industry) continues to dominate the discussion on health care reform. Both of these lobbies are essentially over-priced, market-destroying, vastly-over paid middle men for the majority part. These are the very third parties to the market that have the capacity to corrupt the natural pricing mechanism of the market as well as the power to take the markets from the realm of competition towards oligopoly. Markets based in perfect competition see equal importance of customers and service providers. Markets with third party payers and oligopolistic structures usually see collapse and manipulation/rivalry best modeled by game theory. They rarely reflect the best outcomes for buyers. (Take a basic microeconomics course and you’ll see the truth in this.)

Frankly, I’m overwhelmed by how unprepared we seem to be to deal with these crises. It is because public policy, at this point, seems to completely ignore what we have learned to date about financial crisis and the Great Depression. I do not believe with the resource constraints that we will face in the near future that this bodes well for any of us. Somebody responsible for public policy needs to get real about things very quickly or we’ll have put ourselves on a path to permanent second class world citizen status. Put the hope bong down.  If there are so many green shoots, why does this still look (and feel) like a depression?

Please Digg!!! and Share!!!

Add to: Facebook | Digg | Del.icio.us | Stumbleupon | Reddit | Blinklist | Twitter | Technorati | Furl | Newsvine

One outrage after another. Obama’s recent defense of DOMA leaves a bad taste in the mouth. I won’t continue, I may start to blub again if I do, and I don’t feel like being smug anyway. Claiming that banning Gay Marriage is good for the federal budget, and then invoking incest and pedophilia does not warrant comments that aren’t X rated in nature, and this is a family blog.

But while I’m at it, I want to talk about something that I won’t be scoring any points for. In fact, I’m likely going to get Hell for this, but it needs to be said, and Little Isis can’t be polite and sweet all the the time when she has something to say.

It’s like this: since Bam’s victory in the General Election, there has been talk of “The Obama Generation.” Voters of my age group who tended to vote for him have been dubbed “Obama’s Youth Army.”

Well, for one thing, that sounds so militant. Who wants to be part of a “Youth Army?” Can you say cheesy? Besides, that is a loaded phrase with violent imagery, and I detest violence.

But I digress.

Thankfully, all this talk of “The Obama Generation” and “The Obama Era,” is dying down. Sadly, not because of the incredible corniness of those phrases, but because of what a disappointment my Generation’s alleged savior is turning out to be, only five or six months into his administration.

That’s the thing about Demi-Gods. They’re just human narcissists who are full of themselves, and the messianic imagery gets old after a while. My female friends who voted for the Chosen One will no doubt abandon their “Chocolate Fudge Sunday” in favor of the next big thing when it is no longer cool to like him. It’s like having a boyfriend who is great at first, because he’s, you know, so cocky and good looking. But then eventually you just cannot stand the sight of his smug mug anymore, because every time he opens his mouth to utter something stupid you must resist the urge to backhand him.

No see, there is a point. Since all this talk of “Youth Armies” and “Obama Generations” and “Obama Nightlights” and “Obama Thongs” and “Obama Midnight Movies,” there has been a trend among … people of a certain age group, I guess, to put the blame of Obama on us, that is to say, my generation.

Well, I take issue with that. (Note: I am not referring to most of the commenters here in this post. I have noted that you are all mature adults, and good parents to boot, and you seem to have a strong enough sense of history to realize it is a little more complicated than that.)

Barack Obama is the psychological result of a wound that has festered on America’s Social Conscience for hundreds of years. It has it deepest roots in the Civil War, but an observant understanding of the past sixty or so years of American History puts his presence, and notably, the Villagers love for him, into perspective.

The Great Depression and World War II changed the roles of women in America forever. Because the menz were off fighting their war, the womenfolk had to work. They provided for their families by themselves and the resulting impact on the markets probably saved the global economy. The menfolk won their World War with weapons manufactured by their wives, daughters, sisters, and chicks on the side. Truth be told, it was the women and minorities that done won that War, and in turn they saved the world from fascism, and a Dark Age of economic depression.

That is the beauty of Egalitarianism, after all. But this sudden revelation in the consciousness of the female mind threatened the fabric of Patriarchy that had created the Fascism of Hitler’s Germany and the Iron Curtain in the first place. So naturally, the womenfolk and racial and ethnic minorities had to be put in their place again.

I am often amazed at people who idealize the 1950’s as some kind of Golden Age in America’s History. I mean, granted, I wasn’t alive back then, but it sounds like such a bore. Besides being boring, it was also a time of racial segregation, bigotry and materialism. Don’t get me wrong, I’m sure there were very nice things about it if you were a white male. But women born in that time were given messages by culture and media of that day as to what their roles would be, the best of which can be displayed here:

Geez. The glazed looks on their faces alone. I would go crazy, wouldn’t you? Well, children born after World War II are called “Boomers.” Growing up in the 1950’s resulted in their crazed, counterculture rebellion. Free sexuality (particularly for women) and an awareness of racial and gender equality for the first time since their fathers left for War resulted in another threat to the fabric of a society of Male Social Dominance.

The 1960s seemed to have been a fruition of those psychological wounds that had been festering since the Civil War. It was a difficult, but necessary period in our history, and I roll my eyes at those who label it as a time of “self indulgence.” Of course it was self indulgence! Having grown up behind the restraints and phony smiles of the 50’s, the change in social attitudes at the time was necessary.

But old powers don’t want change. Patriarchy doesn’t want change. They still don’t want change to this day, and that was first made apparent in the 1990’s; when a liberal, middle class Boomer from Arkansas was elected President. The Clintons were the first counterculture boomers to obtain the White House, and they represented a change that the Villagers didn’t want. As David Brock stated in his memoir, “Clinton and Clintonism could not survive.”

The Village represents the Old Ways, and after they were unsuccessful in removing Bill Clinton from office, they focused on destroying his legacy by rigging the election in GW’s favor against Vice President Al Gore.

The Villagers, of course, love Obama and GW because despite the fact that they appear to come from different parties, they are one and the same. Both of them are misogynistic Frat Boys with a preoccupation with the Religious Right, and both of them have blamed Boomers for our country’s ills, labeling them as amoral and divisive.

They are both of an old class and an old order. Both men are narcissistic, arrogant, and believe in their own entitlement. The Villagers love the fact that Obama is biracial and doesn’t truly have the African American Experience to attest to. He was raised by his upper middle class white grandparents, and he is, unlike Martin Luther King Jr., considered a “non threatening black.” He is non threatening in a different way than Jesse Jackson and Al Sharpton, because those two are enabled by the establishment, and therefore aren’t very helpful to the AA community anymore, it doesn’t seem. (EG: No one takes them seriously) Obama is non threatening in a sense that he doesn’t do much to change race relations in America. His Campaign used race-baiting techniques to defeat his opponents and he so far has done nothing uniquely courageous in his unimpressive public career. But he was still able to exploit those wounds in the American Psyche that exist as a result of 1960’s counterculture.

Obama is not a uniquely intelligent man, regardless of what his enablers in the MSM say, but he was and still is smart enough to understand those scars in the American psyche, and his campaign exploited them in the most sinister ways imaginable.

Having grown up in Fundamentalist Religion, like many of the people here, I was uniquely resistant to that psychological message, but most of the people in my generation weren’t.

I was eleven years old on September 11th, 2001. I remember that day very clearly, and I remember the aftermath even better. I remember the message that was told to me in school. We, as a country, were United. Our differences were petty and didn’t matter, because this tragedy had brought us together. It was going to teach us something. We were going to learn about ourselves as Americans, and forgive the sins of the past to achieve a more Perfect Union and to combat the forces that would threaten our freedoms and way of life.

To come of age and watch the events of the past few years unfold before our very eyes is our own experience that is unique to us and always will be. To watch that promise of standing together disintegrate because of deceit, lies, and those sins of the past that still cannot be forgiven is the scar of our own Generation. But it wasn’t perpetuated by us, it was perpetuated by our Elders. By our parents and our elected officials who then had the nerve to say that they knew what was best for us.

It would be hard then, to be resistant to Obama’s condemnation of Boomers. Our media told us that he would heal the nation of the very wounds he was exploiting. He was going to unite us, while he split the Democratic Left in half and set Race Relations back one hundred years. It was the same media that lied to us about Bush and the War in Iraq, but we hadn’t lived long enough to tell the difference anyway. It’s how the media had always been, we knew nothing else, and we didn’t live in the time of Walter Cronkite and Edward R. Murrow. (Funny then, how adults always say we don’t listen.)

Yes, my age group is superficial and materialistic. Yes, girls my age don’t get it and have low self esteem. But who made us? Where did those values come from? You. We didn’t start the fire. You did. Who raised us? You did.

Who is going to inherit your debt? Us. Who’s futures are in jeopardy? Ours.

So own up to it. Be responsible. Be adults. Suck it up. We’re your children, and we didn’t ask for any of this.

And as the Goddess is my witness, if I EVER see anyone say on here that they give up, that there is no way to change anything, that they will never see a woman President in their lifetimes, that it is our Generation’s responsibility now to make it all happen, I swear it, I will go bat shit insane on that person’s ass. Don’t you DARE say anything like that while I am lurking on a thread!

This isn’t just our mess. It’s ours, and it’s everyones, and you made it. So you had better damned well help us clean it up!

Please — DIGG!! & Share!!!

Add to: Facebook | Digg | Del.icio.us | Stumbleupon | Reddit | Blinklist | Twitter | Technorati | Furl | Newsvine

Be sure you’re sitting down before you read this, Okay? Barry Rithholtz speculates in his forthcoming book, Bailout Nation that the entire multi-trillion dollar boondoggle was

a giant ruse, a Hank Paulson engineered scam to cover up the simple fact that CitiGroup (C) was teetering on the brink of implosion. A loan just to Citi alone would have been problematic, went this line of brilliant reasoning, so instead, we gave money to all the big banks.

From the book:

As of October 2008, the other banks, while somewhat worse for wear, neither wanted nor needed the capital injection. None of them were in the same trouble as Citi. Even Bank of America’s problems via Merrill Lynch wouldn’t become acute until December 2008. Washington Mutual, the most troubled on the list, had already been put into FDIC receivership the month before.26 JPMorgan bought WaMu from the FDIC for under $2 billion, and Wachovia was swept up by Wells Fargo for about $15 billion. Thanks to a change in the tax law, Wells Fargo got to shelter $74 billion in profits from taxation. Instead of the FDIC absorbing a few billion in losses from Wachovia’s bad assets, the taxpayers lost 35 times that amount.

According to Rithholtz, today’s news that ten banks are going to pay back the TARP funds provides support for his thesis:

The hurry to repay this cheap cash confirms that the fix was in. If these banks were really in the bad shape Paulson suggested, they would hold onto this cheap source of credit. Instead, they want to throw the yoke of government monies off as soon as possible. The desire to return to their old compensation packages for executives cannot be the only factor . . .

In other words (or as President Obama would say, “Let us be clear”) our government spent $2.25 trillion and put our social safety net and maybe even the future of our country in jeopardy in order to rescue one huge bank that should have just been allowed to go bankrupt. I think I’m going to scream now.

Rithholtz went into more detail in an interview with Bloomberg Radio yesterday. You can listen to it here. In the interview, he makes the argument that huge corporate bailouts always seem to happen in election years. {{Sob!}} There’s a little good news in the broadcast, I guess; since Rithholtz says that while things are still getting worse, it isn’t happening as quickly as before. He thinks maybe we are going to pull out of this without falling all the way into another Great Depression.

Oh goody. But I’d feel a whole lot better about that prediction if I could see any sign that the government cares even a tiny bit about jobs and health care and such mundane needs of ordinary people as opposed to protecting banksters from their own stupidity and greed.

(See also Dakinikat’s post from earlier today.)

UPDATE: The Wall Street Journal has a new article in which they argue that Citigroup should be broken up.

Resolving Citi — by either forcing it into a strategic partnership, if anyone will have it, or selling off its assets and breaking it up — wouldn’t be cheap, but it would have a number of benefits. It would remove the leading candidate for zombie-bankdom from the financial system. It would also, finally, put an end to the slow bleeding of taxpayer money into the bank.

Please DIGG!!! and SHARE!!!